Uninsured by choice? Are they nuts?

By Melinda Fulmer

Every month, Jim Steamer, a sales clerk at a Pennsylvania home-improvement store, takes the $334 he would otherwise pay for employer-sponsored medical benefits and invests it in savings and mutual funds.

Steamer, who makes $9.32 an hour, estimates he's saved $250,000 over his 26 working years by doing without health insurance for himself, his wife and one son.

His friends say he's crazy to "go bare" and risk having to pay for treatment in the event of a major illness or emergency. But the 51-year-old believes he's ready for almost anything, with thousands of dollars socked away in savings accounts.

"People always say, 'What if you get cancer or fall off a ladder or get some disease where you only have six months to live?'"

With average premiums up 78.3% since 2000, according to nonprofit consumer health group Families USA, Steamer and many other Americans are choosing to take those risks.

To Steamer, forking over large amounts on insurance each month seemed to be subsidizing higher-risk colleagues.

"Half of my co-workers are overweight. Some of them smoke and go to beer parties," he says. "I don't participate in any of that."

Rent or insurance?

The percentage of people declining employer-provided benefits because of cost has been rising since 2001, reaching 23% in 2005, the last year for which data are available, according to the Employee Benefit Research Institute. (Of the other 77% who turned down coverage, most did so because they had insurance through a spouse's policy.)

And in 2007, even as the total number of uninsured Americans declined, the number not covered by employer-provided health care continued to grow, according to U.S. census data.

For some people, it's a calculated strategy designed to pad investments and savings accounts -- or to fund better vacations. But for others, declining health care coverage isn't an option. They might want insurance, but there's simply no way to make the rent and pay $300 to $400 each month for their share of the premiums.

Allison Furrer, a 25-year-old MSN Money reader from Lonsdale, Minn., says she declined insurance in 2005 when she worked at a clothing chain, because it would have cost $160 of the $1,000 she was making monthly.

"When hovering at the poverty line, $160 a month makes a huge difference in your wallet," she says.

Reader Erin Shank says she usually declines coverage when it is offered. Only recently was the 25-year-old customer-service representative "talked into accepting coverage," a move she now regrets.

"I add up all the money I am paying monthly and think, 'What a waste!' Forty-five dollars . . . times 26 pay periods in a year equals $1,170 I could be putting in my pocket or toward my 401(k)."

But doctors and financial planners say going without coverage is like playing a game of Russian roulette with your health and savings.

Facing the odds

Even routine hospital procedures can wipe out the savings of most middle-class workers. And serious health conditions or injuries can drive even affluent folks deep into debt.

"People should think very carefully before they opt out of that choice," says obstetrician Joseph M. Heyman, the chairman of the American Medical Association's board of trustees. "People go bankrupt when they have unexpected medical conditions and have no insurance to pay for their needs."

Here are a few examples of what basic medical care can cost you:

• A broken hand costs an average of $21,700 to treat out of pocket at a hospital, according to Vimo, a health care cost-comparison Web site.

• Four days in a hospital with pneumonia will set you back an average of $11,300, according to Vimo.

• Need a hernia repaired? That will run you about $9,475, according to Health Grades, a hospital-rating service.

And heaven help you if you wind up needing heart bypass surgery. The $172,000 charged by hospitals to the uninsured far outweighs the $7,000 out-of-pocket cost paid by insured individuals, according to Health Grades.

Continued: A deadly gamble

 1 | 2 | next >